The Middle Ages Part 2: Money Tips for Your 40’s

On Friday I spent some time talking about your 30-something years and hopefully when you took action you got through those years building a good strong base and plan to tackle your financial future for the next decades. Moving on now, if you’ve made it to your 40-something years, the challenges may be different but they still require a focus and goals. So here’s my take on money tips for your 40’s.

The Middle Ages Part 2: Money Tips for Your 40's

Your 40-Something Years

By the time you’ve reached your 40’s, you’ve probably found your career groove, or maybe you’ve even started over. For better or worse, you and your partner have probably gotten into a routine with money. If you have children, they’re growing up right before your eyes leading you to start thinking about the prospect of college. While you may feel like you have everything under control, don’t forget about these important financial responsibilities:

1. Check Your Credit Report

Now’s the time to examine your credit report really thoroughly. Sure you looked at it a few times in your 20’s and 30’s, but now is a great time to really dig into it and make sure it’s a document that’s 100% accurate and really where you want to be at this point of your life. Credit ratings can affect so many things in your life besides just the interest you pay on your home mortgage or credit card. It can also be a factor in getting the new job you want or getting the best interest rates available that will save you hundreds over the long haul. If you need to borrow money for any reason, do you want to be turned down or saddled with a higher rate? If there are errors on your report, and there commonly are, correct them now and save the grief that you will have later. Credit Karma is the best source I know to examine your report and it’s totally free. Check out all the credit sources you have ever used and check accuracy. You can check every month and see what is causing any changes in your credit rating.

2. Calculate Your Net Worth

Take stock of all your assets and liabilities. The difference is your net worth of course and there is an importance to that number as you move down the road to financial wellness. When you started out years ago you may have actually had a negative net worth, especially if you had huge student loans to pay off. But at some point (hopefully long ago by now), you have come to the surface and have a positive number on your side of the ledger. Make a list of what you have and what you owe.  Get focused on the owe part and try to eliminate it with a goal. It’s a heck of a lot easier to eliminate your debts than increasing your assets quickly. Either way, your net worth should be increasing during your 40’s. Paying off your liabilities is especially important if that is a big part of your scenario.

3. Revise Your Budget

You created a budget…once. Have you been looking at it on a regular basis? Your life situation is constantly changing, especially if you have a spouse and family. Every time you move, change jobs, or have a child, your financial world changes and you need to know exactly how to adjust your finances. If you don’t do it, unpleasant surprises can and will happen. Are you making sure that savings is a big part of your budget? Money isn’t just left over at the end of every month. Let me say again here, pay yourself first! It’s the best way you can insure that you have a kitty, emergency fund and a retirement plan in place!

4. Boost Those 529’s

Your children will probably be heading off to a school in a couple years . Have you established funds for it? 529’s help with that and even if you didn’t establish any when they were newborn, it’s never too late and you still have time. And if you did establish them early on, now’s the time to boost them up. By age 40, have a plan in place.

5. Eliminate Your Debt

If you haven’t gotten it all paid down by now, make a pay plan specifically for your biggest and most important debts. Target the date that you will be debt free.  Review it often so that it becomes a real part of your everyday focus.

6. Maximize Your Work Benefits

Make sure you are doing all you can to take advantage of the matching funds at work for your 401k plan. It’s a gift from your employer and is “free money” so be sure you get every penny! Check on the rules for contributions and tax deductions as they can change every year. And don’t forget to explore all your work benefits to make sure you get everything you’re entitled to.

7. Establish Your IRA’s

Whether Traditional or Roth, they all can shelter your money from taxes either by delaying it until it’s withdrawn or lessening you tax burden right now when deposited. Either way it will increase income and be protection for your retirement life which you need to prepare for now. Time is running out!

8. Update Insurance Coverage

This is the time of life when you must have insurance. Protecting your family is a must if you’re re unable to work or perhaps are disabled in your 40’s. Setting up a long term disability insurance policy is highly recommended so that with it you can replace 2/3 of your income if something prevents you from working.

Also needed are less expensive term life policies. As you age and your health declines it becomes more and more difficult and expensive to obtain insurance. Now when you have dependents at home, you need financial support if something happens to you, the bread winner. Make sure you have enough coverage.

The 40-something years are the times when you should have a firm hold on your financial situation. Despite the fact that you may think you have plenty of time in your favor, your career, your family setting, and your financial situation are at a mid-point. In the middle of any project, you should have all the basics covered, supplies that you need, and a plan that’s in the midst of execution.  When you’re in the middle, you see the light at the end of the tunnel. If you don’t, you probably are headed for trouble. Be honest, evaluate where you are now. Because soon enough you come to your 50’s, the time of your life when you should feel most comfortable as you approach retirement. But we’ll talk about that next time.

Are you a 40-something? How are you dealing with your finances and relationships at home and work that affect you every day? What advice do you have for your middle aged counterparts?


  1. Great series Gary. I am forty something. I believe the sooner you can build a plan for your money, kill debt and save it will make your life easier at any age. I didn’t start doing this until I was 40, and so wish I had started sooner. Also, as a parent of three children I would also recommending teaching your children as much as possible about money, don’t rely on someone else to do it. The sooner they can get started the better off they will be too.

  2. We didn’t even start getting our act together until our 40s so it’s not too late! But if you still have debt by then, as you said, you need to get rid of it. Then you’ll find that accelerating the savings plan becomes easier.

  3. I’m getting close. I’ll be 38 in 2 months. We definitely need to ramp up IRA savings before I hit 40. That’s made difficult this year by the fact that we’re no longer touching Tim’s SSA check, but I’m hoping I can use some of the yearly bonus to at least open a SEP in addition to our Roth

    1. Really good idea to use bonuses and other “unexpected” money to go directly to retirement planning. I know that sometimes it’s just not possible, but if you think that you can, even if it’s a little bit of a strain, just do it. I promise that one day you’ll be very happy you did. Thanks for your comment, Abigail.

  4. Great tips Gary. I think looking at Net Worth is very important at this stage. Similar to budgeting, it forces you to actually take a look at where you are. It’s easy to ‘feel’ like you are getting somewhere, but it is much better to write it down and actually see it. It can either be motivational because you are on the right track or motivational because you realize you need to kick it up a notch!

  5. Thank you Gary! Super helpful. Looking at this I feel like my husband and I are on the right track – debt gone, IRA’s established, 529’s – well they are there! We are looking a lot harder at our budget and trying hard to keep out of all the spending traps out there. That’s where our focus is, and also planning for that awful fear that as you get older, your career opportunities just feel more precarious. Can’t compete with cheap 25 year olds who don’t have kids to rush home to.

    1. Thanks, Linda. I’m glad that you’re in the right place with your financial plans. A word of encouragement…keep in mind that most 25-year-olds lack the experience and stability that someone in their 40’s has obtained and shown to employers. In most cases, those seasoned employees are at the top of their game and are considered really valuable.

  6. Well, in a minute I’ll be heading over to read your money tips for people in their 30s since I missed that before but thankfully I do have a positive net worth which is reassuring. No debt, but not enough in the way of savings! Appreciate the tip on updating insurances, that is important and one thing I tend to overlook.

  7. Jayson @ Monster Piggy Bank

    Your post has made me realize that I should be really ready and prepared in terms of savings by the age of 40 so that by the age of 50 I’d be fully ready to retire, Gary.

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